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The Impact of Information Sharing on the Use of Collateral versus Guarantees

Journal paper
Ralph De Haas, Matteo Millone
World Bank Economic Review (forthcoming)

We exploit contract-level data from Bosnia and Herzegovina to assess the impact of a new credit registry on the use of borrower collateral versus third-party guarantees. Among first-time borrowers, the introduction of mandatory information sharing leads to a shift from collateral to guarantees, in particular for riskier borrowers. Among repeat borrowers, both collateral and guarantee requirements decline in proportion to the length of the lending relationship. These results suggest that information sharing can both reduce adverse selection among new borrowers and hold-up problems among repeat borrowers.

Practice What You Preach: Microfinance Business Models and Operational Efficiency

Journal paper
Jaap Bos, Matteo Millone
World Development, Volume 70, June 2015, Pages 28–42


The microfinance sector has room for pure for-profit microfinance institutions (MFIs), non-profit organizations, and “social” for-profit firms that aim to pursue a double bottom line. Depending on their business model, these institutions target different types of borrowers, change the size of their loans and adjust their loan pricing. We introduce a simple approach that accommodates a wide range of business models and allows us to estimate the operational efficiency of MFIs. Our empirical results show that MFIs with a high depth of outreach are most efficient, resulting in higher levels of outreach and profits for the same input mix.


  • Microfinance;
  • Output distance function;
  • Outreach;
  • Efficiency

The Social Function of Asset Classes in Microfinance: Enhancing Performance Through Donations, Private Equity and Debt

Book Chapter
Harry Hummels and Matteo Millone
In book:


This chapter examines, within the context of microfinance, the proposition that different asset classes have different social functions. It considers the role of donations, debt and equity in funding microfinance institutions (MFIs). The goal is to examine whether and how different asset classes shape the social and financial performance of MFIs. Based on an analysis of the literature and interviews with investors we find that private equity investments provide the best opportunity to create social impact due to its propensity towards active investor engagement. Debt investments are best suited to finance growth of the microfinance industry and the integration in the regular financial system. The professionalization of microfinance becomes increasingly relevant for attracting private capital and a sustainable development of the microfinance sector.


  • Microfinance;
  • Socially responsible investment;
  • Impact investing;
  • Private equity
  • Private debt

Show Me Yours and I’ll Show You Mine: Sharing Borrower Information in a Competitive Credit Market

Working paper
Jaap Bos, Ralph De Haas and Matteo Millone
CentER Discussion Paper Series No. 2015-027


Fig1_panel3We exploit detailed data on approved and rejected small business loans to assess the impact of the introduction of a credit registry in Bosnia and Herzegovina. Our findings are threefold. First, mandatory information sharing tightens lending at the extensive margin as more applications are rejected, in particular in areas with strong credit market competition. These rejections are increasingly based on hard information—especially positive borrower information from the new registry—and less on soft information. Second, lending standards also tighten at the intensive margin: the registry leads to smaller, shorter and more expensive loans. Third, the tightening of lending along both margins improves loan quality. Default rates go down in particular in high competition areas and for first-time borrowers. This suggests that a reduction in adverse selection is an important channel through which information sharing affects loan quality.